Cisco needs to put focus back on its routing business, say analysts

Following a disappointing financial outlook, investors and analysts are now questioning whether Cisco (Nasdaq: CSCO) should shed its growing consumer business portfolio and put its energy back into its bread and butter routing business.

Analysts believe that Cisco should consider selling off its consumer router unit Linksys in addition to its cable business unit Scientific Atlanta and its Cius tablet computer line.

"What investors would like is to see them more focused on their core market, like routers, switches and data centers, and de-emphasize or even exit some of these consumer businesses," said Morningstar analyst Grady Burkett in a Reuters article.

Up until now, the idea of selling off its consumer divisions might have at one point been counter to Cisco's CEO and Chairman John Chamber's previous strategy to provide products that carry consumer Internet traffic, which would ultimately be carried over its core and edge routing equipment. However, consumer product sales declined 15 percent in the recent quarter.

At the same time, Cisco's routing rivals, including both Alcatel-Lucent (NYSE: ALU) (on the edge router side), Juniper (NYSE: JNPR) and Huawei continue to pick away at its long-standing routing empire. Notably, Alcatel-Lucent reported that IP revenues increased 58.8 percent to $687 million as IP/MPLS service router revenues doubled from Q4 2009.